Are Intellectual Property Rights Detrimental toInnovation?

Intellectual property rights are legal constraints that limit entry in industries where incumbentsare innovators. The set of legal constraints is the same for all industries, withoutconsidering that the externalities created by entry are not necessarily negative for the incumbentor that the incumbent’s R&D expenditures can be detrimental to entrants. We showthat one unique set of legal rules can foster innovation and increase total R&D expendituresin some industries and be detrimental in others. The model is illustrated by case studiesfrom the information and communication technologies industry (software, hardware, musicand videogame industries).[...]